About 1 in every 7 home loans was either past due or in foreclosure at the end of the third quarter.

About one in every seven home loans in the country was either past due or in foreclosure at the end of the third quarter, according to the Mortgage Bankers Association's most recent National Delinquency Survey. That's the highest delinquency rate in the survey's history (the data begin in 1972).

 It's important to note that mortgage delinquencies continue breaking records in the face of Uncle Sam's sweeping effort to keep struggling borrowers in their homes. Although the initiative has put more than 650,000 borrowers into trial loan modifications, there is growing concern that the Obama administration's initiative isn't well-suited for today's housing crisis. For example, although unemployment is the key force behind current delinquencies, borrowers who can't make mortgage payments because of a job loss can't participate in the program. Observers in growing numbers have called this a key shortcoming of the Obama administration's housing rescue. Expected Failure rates of those on currently in "Loan Modification" status to be 1 in 3 Foreclosure Rates will continue to raise in early 2010

So as they say in Minnesota

FARGO and much MOORHEAD 

What is ahead for the housing market in 2010 -

Ran across this information today from By Christopher Solomon of MSN Real Estate

and wanted to make sure all Buyer had a chance to see it... the market is only going to get hotter in 2010 so be sure you have the most update information....

 1. Choose a reputable auctioneer. First, do your research by poking around the auction Web site's "About" page; find out when the site was established and how long it's been in operation, says author Roberts. Make sure the business has a real street address or mailing address, not just a P.O. box, he says. Make sure the business has a phone number you can call -  and do so, asking the person who picks up the phone about the business.

If the service requires you to pay a deposit prior to entering a bid, make sure you're paying the deposit to a reputable escrow company, not to the individual running the auction, warns Roberts.

2. Do your homework. It applied in seventh grade; it still applies. When you see a property that intrigues you, know what you're getting into, says Bid4Assets' Lauroesch.

How? Several ways:

• Know what properties are worth in the area where you're looking. You can start by reviewing local listings, checking out open houses for similar homes and by using online home-valuation tools. 
• Go and physically look at the house, and have it inspected if possible: "Foreclosed properties unfortunately do have a tendency to be damaged by the people who are leaving the property," Lauroesch says.
• Have your financing and money lined up so you know what you can spend.

3. Do more homework. Do a title search. Either ask to be provided one, or go to the county records office and get one. You're checking to make sure the property can be bought free and clear, with no liens.  And if there are liens, ensure that they can be satisfied in the transfer process, says Lauroesch. Have this document interpreted for you, says author Sherby.

4. Know the law. "Foreclosure is not a national thing; it's administered on a state level," says Sherby. Get familiar with the laws in the state where you want to buy. (You can see RealtyTrac's foreclosure laws here.)

For example: In New Jersey, Sherby says, if you buy a home at auction, the owner still has 10 days to reclaim the property if they somehow can come up with the money. "You will still be refunded your money, but some of these rights of redemption can go for up to one year," complicating a would-be homeowner's plans to fix up and perhaps sell a property, he says. "It restricts your ability to do anything with that property," he says (though he concedes that 99 times out of 100 the previous owner will not redeem the property. If they could, "it wouldn't be in foreclosure.")

5. Tally all the costs. Make sure you weigh all the costs of buying that home before you go for it, everything from how much repairs will cost to how much the financing will cost you, says Sherby. And here's something auction newbies may forget: Depending on the auction, there can be a "buyer's premium" of 10% to 15% tacked on to some properties sold at auction; be sure to study the terms of sale, advises Williams.

 

6. Think local. "I think the online auctions are great, but I still think that to be a successful investor you still need to invest in your neighborhood," says author Roberts. That means buy close to home, ideally in a general circle in which you travel in your regular life. "In every circle you travel, there are opportunities," he says.    

Why hyper-local? "Because you know the area. You can drive to the home. You can maybe even find a tenant whom you know to occupy the home. The farther it is away from you, the higher the chances you could be a victim of fraud," he adds. "The houses I own, I can drive by them on the way to work. In fact, I drive by one of them each day on the way to work."

Holiday sales up

 According to figures from MasterCard Advisors' SpendingPulse, which track all forms of payment, including cash, retail sales rose 3.6 percent from Nov. 1 through Dec. 24, compared with a 2.3% drop a year ago.  Adjusting for an extra shopping day between Thanksgiving and Christmas, the number was closer to a 1 percent gain.  Last year, the economy was in "critical condition," said Michael McNamara, vice president at MasterCard Advisors' SpendingPulse. "This year, it's in stable condition."  "We had a pretty decent surge," McNamara said.  Online sales were a particular hot spot, fueled by a big increase the weekend before Christmas. They rose 15.5 percent on the season, though they make up less than 10 percent of all retail sales.  Stores count on a post-Christmas boost because of the growing importance of January on the retail sales calendar. Last year, the week after Christmas accounted for 15 percent of overall holiday sales, according to ShopperTrak, a research firm.  Retai  l consultant Burt P. Flickinger describes gift cards as "the lifeblood" of the post-Christmas season, because shoppers typically spend more than the value of the cards.  "Retailers with a disappointing December are going to need January to survive," Flickinger said. "Inventories are even too low for retailers

Mortgage rescue can kill your credit rating

 Most troubled homeowners don't realize that President Obama's entering a trial mortgage modification can actually hurt their credit.  It's true that many people who apply for the president's plan are already delinquent in their mortgage payments, but being in a months-long trial period may only add to the pain.  Under the president's plan, troubled borrowers can have their monthly mortgage payments reduced to 31% of their pre-tax income.  Homeowners are first put in a trial modification for several months to prove they can handle the new commitment and to give the bank time to collect the necessary income and hardship verification documents.  During this period, industry guidelines call for loan servicing companies to report borrowers to the credit bureaus according to their status before they entered the modification - either current or the number of days delinquent.  However, borrowers' accounts are also designated with a code indicating they are in a partial payment plan.

  The coding alone can impact credit scores, which measure a consumer's financial health and range from 300 to 850 under the FICO system. The severity depends on how many payments the borrower missed before entering the program. Those who were current in their mortgages could see their scores fall up to 100 points, according to the Treasury Department.

S.&P Downgrades Five Mortgage Insurers

Standard & Poor's downgrade the credit ratings on five mortgage insurance companies. The credit ratings agency said continued losses on insurance claims exceeded previous expectations, as low-risk books of business are starting to experience greater losses.  "The lower-risk books of business within the mortgage sector (such as those with higher FICO scores or lower loan-to-value ratios) have been and will be more adversely affected than we had anticipated and U.S. mortgage insurers' losses will continue to be greater than previously expected overall," S&P analyst Ron Joas wrote.  "If the US economy were to experience another setback, prolonging the exit from the recession, delinquencies and resulting losses could increase at an even greater rate, with lower benefits available from rescissions than what has been seen over the past year," Joas wrote.  "In addition, any existing and potential benefits from modification programs might reverse, and modification attem  pts might be ineffectual."  The mortgage insurers downgraded are: Genworth From triple-B plus to triple-B minus; PMI Group from double-B minus to B plus; Radian Group from double-B minus to B plus; Republic Mortgage Insurance Co. From A minus to triple-B minus; United Guaranty From triple-B plus to triple-B.

Mortgage rates increase

 Freddie Mac said the average rate for a 30-year fixed-rate mortgage (FRM) was 4.94% with an average 0.7 point for the week ending December 17, up from 4.81% last week. A year ago, the 30-year FRM was 5.19%.  Freddie Macs survey has put the rate for 30-year FRMs below 5% for the past seven weeks, creating a boost in refinance activity. Bankrate.com put the 30-year FRM at 5.13% with an average 0.42 point for the same period, up from 5.04% in the previous week.  Mortgage rates followed bond yields higher once again this week amid signs of an improving economy, said Frank Nothaft, Freddie Mac vice president and chief economist.  On the consumer side, retail sales jumped 1.3% in November and consumer sentiment, as measured by the University of Michigan, rose above the market consensus forecast to the highest reading since September.  Industrial production also showed large gains in November. 

 Freddie said the 15-year FRM averaged 4.38% with an average 0.6 point, up from last week when it was 4.32%. A year ago, it was 4.92%. Bankrate.com put the 15-year FRM rate at 4.53%.  The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.37% with an average 0.6 point this week, up from last week when it averaged 4.26%, Freddie said. The one-year Treasury-indexed ARM averaged 4.34% this week with an average 0.5 point, up from last week when it averaged 4.24%. Bankrate.com put the five-year ARM at 4.6%, up from 4.55% last week

Foreclosure backlog at 1.7 million

 About 1.7 million homeowners were on the verge of foreclosure in the fall, a looming "shadow inventory" of homes that will be put up for sale in the coming years and weigh down prices, according to a report from First American CoreLogic.  The number, up from 1.1 million a year earlier, is likely to keep rising through the middle of next year or later, said Mark Fleming, chief economist of CoreLogic.   The foreclosure backlog isaAlready equal to nearly half the 3.8 million unsold new and existing homes currently on the market, First American said.  "We're going to be dealing with high levels of distressed (sales) in the marketplace for at least a couple of years," Fleming said. "It's not just all going to disappear."  Other reports have come up with larger estimates.

 But FirstAmerican assumes that fewer delinquent borrowers  only about one-third  will wind up losing their homes. It also estimates that nearly 30 percent of bank-owned properties have already been listed for sale.  In many markets around the country, the number of new foreclosures has dropped in recent months as homeowners are reviewed for loan modification programs. But real estate agents, who have seen this as an encouraging sign, still fear that an onslaught is coming.  "We've been in recovery mode for most of the year. How many foreclosures do they have to dump on the market to affect that? I don't know," Deborah Farmer, owner of StarLight Realty in Tampa, Fla. "Any house priced under $225,000 will be affected by a large increase in foreclosures in this market."

More foreclosures coming

 Diana Olick has climbed on board with an increasing number of people who thinks foreclosures are still going to hit us like a ton of bricks, driving home prices even further down.  She quotes Lender Processing Services: "The November Mortgage Monitor report, released by Lender Processing Services, Inc. (NYSE: LPS), reveals a nationwide loan deterioration ratio higher than 3:1 - indicating that for every one loan improved, three more loans are deteriorating... The number of foreclosures on the market continues to stall as foreclosure timelines extend. Nearly 30 percent of properties that have been in foreclosure for 12 months have not yet been put on the market for sale - twice the level of the prior year. Foreclosure inventories continued to climb to record levels. October's foreclosure rate stood at 3.14 percent, a month-over-month increase of 0.7 percent and a year-over-year increase of 85.1 percent."  And she quotes Mark Zandi, who we quoted yesterday:  "This lull in forec  losure sales has resulted in the price gains in the past few months," he told Reuters.  "Foreclosure sales will increase, and home prices will resume their decline by early 2010 as mortgage servicers figure out who will not qualify for a modification."

Auto delinquencies up in 3rd quarter

According to credit reporting agency TransUnion, auto delinquency rate -- the rate at which payments fell behind 60 days or more -- edged up in the July-to-September quarter to 0.81%, from 0.80 in the same period last year.  Car loan payments that are 60 days or more late are considered a precursor to default because of the difficulty consumers face in getting caught up.  TransUnion culls its data from approximately 27 million individual credit files in its database.  The small increase in auto delinquencies compared with 2008 also reflects the fact that loans are harder to get, because banks and finance companies have raised their lending standards, and consumers are looking for fewer loans as they tighten their belts.  Those factors led to a drop in average auto debt in the third quarter. Nationally, the amount outstanding on the average car loan dipped 2.5% to $12,542, from $12,861 last year.  Loans taken out as part of this summer's Cash for Clunkers program had not start  ed to appear on most credit reports when the quarter ended. As those new loans show up on credit files, there is a good possibility average auto debt will increase. But since lenders offered loans only to stronger applicants, those loans are less likely to end up delinquent, according to Peter Turek, automotive vice president in TransUnion's financial services group.  TransUnion forecasts the fourth-quarter auto delinquency rate will rise to almost 0.9%. Fourth-quarter rates are typically higher, as consumers divert money to holiday spending. The weak labor market will also continue to weigh on consumers

End of the Year Tax Tips

 It's that time of the year; no, we aren't talking about holiday shopping or gift giving guides...it's time to put those last minute tax strategies into place before the end of the year. Act now and chances are you will have just enough time to implement these money saving tips:

 1. Transfer Assets: Have a high income with a stay-at-home spouse? Talk to your accountant about transferring income-producing assets into their name instead of yours. For example, if you currently own investment properties worth $500,000 which produce an income of 5 percent or $25,000 annually you could be hit with a tax bill of up to $12,500 for high income earners. On the other hand, by transferring these to your spouse, it may be possible to save half or more in taxes alone.

 2. Buy Now - Sell Later: High net worth individuals may find it beneficial to close on short sale property prior to the end of the year and/or hold of selling until the beginning of 2010 in order to reduce 2009 taxes. Likewise, purchase supplies and materials needed to renovate or sell a property as well as office equipment before the end of the year.

 3. Pay Property Taxes & Insurance Early: Strategically time the payment of property taxes and insurance to get maximum impact; most locations allow property taxes to be paid between November and April...by delaying payment or paying early, it is often possible to show two payments in one year thereby offsetting a high income year. Just remember, should you exercise this option you will not have any deduction the following year. However, it's a great way to help reduce high income years for short sale investors that have several properties under contract.

 4. Make Contributions: Don't forget to make pension contributions prior to the end of the year. If you've had an especially good year be sure to maximize contributions.

 5. Donate to Charity: Rather than tossing away building supplies, old office equipment and even personal belongings put them to good use by donating to charity. Not only will it help others in need but can also help offset taxes.

6. Take Write-Off's & Make Large Gifts Now: If you intend to help family or friends with the purchase of a large item or cash gift, do it sooner rather than later. Under the current guidelines, you can give up to $12,000 tax free to any individual making it a great way to distribute assets rather than leaving it for estate taxes. Remember, even debt forgiveness has tax consequences. Be sure to document everything.

7. Review Family Trusts: Depending upon your individual circumstances, family trusts make great financial sense but be sure to review them annually to determine when to begin drawing down benefits or make further contributions.

8. Take a Loss: Many short sale investors have had a very profitable year but nearly everyone has at least one under-performing investment lingering around their portfolio. Whether it's a cherished stock you've been holding or dismal bonds of some near bankrupt company - offset taxes by taking a loss now.

9. Verify Tax Credits: First-time homeowners aren't the only people who may qualify for some form of tax credit so be sure to check. College expenses, continuing education courses, new car purchase and even energy efficient upgrades are just a few of the potential tax credits that may be of interest to short sale investors.

10. Begin Planning for 2010: The last thing you want to think about is next year's taxes but it's never too early to get organized. In fact, that new PDA, NeatReceipt Scanner and other helpful gadgets may just qualify for additional write-offs!